Kuala Lumpur, Malaysia – In his first speech as Malaysia’s 10th prime minister, Anwar Ibrahim pledged to prioritize the welfare of “ordinary Malaysians”.
To deliver on its promise, Anwar will have to tackle a range of economic challenges, from the lingering scars of the pandemic and rising cost of living to a depreciating currency and one of the wealthiest gaps in existence. Asia’s largest poverty.
Anwar, the appointee remarkable three-decade journey from leader-in-waiting to jailed opposition leader and vice versa, has given some specifics about his economic plan beyond promising to lead the development including race and no corruption.
But Anwar, confirmed as prime minister on Thursday After days of political stalemate that immediately sent stock markets and the Malaysian ringgit higher, has earned a reputation as a reformer inclined to liberalize the economy during his long political career. .
“Anwar has a good understanding of the economy and has a thoughtful and eclectic approach. He has the ability to seek out different perspectives and focus on economic reform,” Geoffrey Williams, economist and non-resident senior fellow at the Malaysian University of Science and Technology, told Al Jazeera.
“There will be fewer funding-based policies and more structured long-term solutions. I also think he will present a very attractive prospect for international investors and financial markets.”
During the campaign, Anwar, the leader of the multi-ethnic coalition Pakatan Harapan (PH), emphasized his connections to international business and finance, arguing that he could attract investors. whom he considers his “friend”. He also stressed the need to restore Malaysia’s image abroad, which has been battered by the 1MDB corruption scandal involving jailed former Prime Minister Najib Razak.
“There is no doubt that corruption is Malaysia’s most serious systemic problem that can lead to an unequal distribution of wealth, affect the quality of education and healthcare, lead to a poor standard of living. lower overall Malaysian population,” said Grace Lee Hooi Yean, dean of the Department of Economics at Monash University Malaysia. Economics, told Al Jazeera.
“In a corrupt economy, resources are allocated inefficiently and companies that would otherwise be ineligible to win government contracts are often awarded projects as a result of bribery.”
As deputy prime minister and finance minister in the 1990s, Anwar, 75, presided over a boom period that saw Malaysia become one of the world’s fastest-growing economies.
At the start of the 1997-98 Asian Financial Crisis, Anwar implemented spending cuts and market-oriented reforms recommended by the International Monetary Fund, earning respect among Western financial circles. but strained relations with his political adviser and then Prime Minister Mahathir Mohamad.
As relations between the two deteriorated, Mahathir fired Anwar, who went on to lead the Reform movement against the government before being jailed for sodomy and corruption, criticized at home and abroad as a politically motivated.
“Given his legacy as finance minister in the 1990s when the economy enjoyed near double-digit growth driven by manufacturing exports, I expect Anwar to be more market-oriented and more investment-friendly. foreign direct investment and infrastructure investment,” Niaz Asadullah, a professor of economics at Monash University Malaysia, told Al Jazeera.
“Compared to previous leaders, he will seek global integration and attempt to repair Malaysia’s tarnished international image as an investment destination by aligning domestic policies with consistent with global standards and international best practices.”
Asadullah said he expected Anwar’s agenda to be pro-business but also “people-centric,” focusing more on allocating resources on the basis of need rather than membership of the organization. an ethnic group – a divisive topic in Malaysia, where the majority Malays receive some privileges not accorded to the Chinese and Indian communities.
The last PH government, elected in 2018 in a historic vote that ended six decades of rule by the Malay-majority Barisan Nasional (BN), collapsed in part due to a reform agenda that Malay nationalists feared it would undermine the Malays’ “special position” in the Organization.
Asadullah said: “Although he remains committed to social protection policies, he will seek to minimize financial leakage by streamlining subsidies and ensuring smart targeting of sources. force and service”.
After suffer the greatest contraction Since the 1997-98 Asian Financial Crisis, the Malaysian economy has recovered strongly from the pandemic.
Gross domestic product grew 14.2% in the July-September period after growing 8.9% in the second quarter.
However, Southeast Asia’s fourth-largest economy is facing a slowdown in growth amid fears the global economy will slide into recession in the coming months.
Infla extended, while the ringgit hovered near a quarter-century low.
For Malaysia’s long-term prosperity, structural reforms are needed to ensure the transition to a high-income economy, economists say.
The Organization for Economic Co-operation and Development (OECD) and the World Bank have emphasized increasing social protection and facilitating competition in state-dominated sectors such as transport and energy. are reform priorities.
“The prerequisite for achieving a developed and high-income country is to move towards a ‘high-productivity, high-income’ workforce,” said Lee, professor at Monash. “However, low economic growth has plagued the Malaysian economy after the Asian financial crisis. One of the main contributing factors to low growth is the low rate of productivity growth.”
As the head of a unity government that includes a number of rival groups including BN, Anwar, whose first mandate includes passing the long-awaited budget for 2023, could struggle to get through. implementation of any significant reforms.
“With the unity government he is leading, it will be difficult for him to implement structural reforms quickly without lengthy negotiations and consensus among coalition members,” Yeah. Kim Leng, director of the Economic Studies Program at the Jeffrey Cheah Institute for Southeast Asia at Sunway University, told Al Jazeera.
“With the ‘big bang’ potentially risky and politically destabilizing, he will certainly be attracted to Deng Xiaoping’s ‘feeling the gravel when crossing a stream’, the symbol of his approach to politics. gradualism,” Yeah added, referring to China’s reformist leader who presided over a period of economic liberalization in the 1980s.
Harris Zainul, a senior analyst at the Institute of Strategic and International Studies (ISIS) Malaysia, said Anwar is unlikely to change the status quo given political uncertainties, including upcoming state elections. next.
“I do not expect Anwar to make any major changes in economic policy, especially on taxes, in the near term,” Zainul told Al Jazeera.
“The reason is that there is little political desire to increase the tax base at the moment, with some important states in Malaysia still needing to hold elections in mid-2023. Until that happens, I don’t think Anwar is. would risk anything that might be seen as politically unpopular.”